Failing Health Care Co-ops Will Cost Taxpayers

Consumer Operated and Oriented Plan Programs (COOPs) were really a political compromise between Members of Congress who wanted a public plan option and those who didn’t. Once the Affordable Care Act passed, COOPs had outlived their usefulness. However, they are now failing and will cost taxpayers plenty. Senior Fellow Devon Herrick testified before a congressional committee.

Making Enemies of Endangered Species

Private landowners are the linchpin to successful endangered species conservation. Some, or all, of the habitat of 78 percent of species listed are on private land. This is the largest percentage among all categories of land ownership, including federal, state and municipal governments, nonprofit organizations, Indian tribes and so forth. 4 Uncompensated regulatory “taking” under the ESA creates a perverse incentive for landowners to do precisely what the law is intended to prevent. It turns endangered species into financial liabilities and landowners into their unwitting enemies. Predictably, landowners have taken actions to rid their property of endangered species; either directly, by killing them — known as “shoot, shove and shut-up” — or indirectly, by applying a “scorched earth” policy that makes actual or potential habitat unsuitable through such activities as plowing, prematurely cutting trees or clearing brush.

“Most of the habitat of endangered species is on private land.”

To witness the ESA's bitter harvest, one need only visit endangered species “hot spots” such as central Texas, southern California and the state's Central Valley, much of the Southeast, and the Pacific Northwest. Fields are not allowed to lie fallow, trees are cut on faster rotations, brush is cleared and a host of other actions are taken to deny habitat to endangered species. Not only does endangered wildlife lose, but so do many more common species that depend on these lands.

Even the ESA's staunchest supporters acknowledge the Act is causing great harm. According to Environmental Defense's Michael Bean, widely regarded as one of the foremost experts on the ESA, “[T]here is increasing evidence that at least some private landowners are actively managing their land so as to avoid potential endangered species problems.” His comments on the red-cockaded woodpecker are broadly applicable to most endangered species. “The problems they're trying to avoid are the problems stemming from the Act's prohibition against people taking endangered species by adverse modification of habitat. And they're trying to avoid those problems by avoiding having endangered species on their property.” Bean then explained the motivations behind these actions. “Now it's important to recognize that all of these actions that landowners are either taking or threatening to take are not the result of malice toward the red-cockaded woodpecker, not the result of malice toward the environment. Rather, they're fairly rational decisions motivated by a desire to avoid potentially significant economic constraints. 5

Here are a few examples of how the ESA can turn friends of wildlife into enemies.

“Landowners with red-cockaded woodpeckers cut more timber on their land to avoid property devaluation.”

Case Study: Clear-Cutting in North Carolina. A well-known case of a landowner punished by the ESA involves Ben Cone of North Carolina. In the 1930s Cone's father bought some 8,000 acres in southeastern North Carolina for a private hunting and fishing preserve. The timber had previously been clear-cut and the land was in poor condition. But over the ensuing decades, Cone and his father rehabilitated the land, planting native pine trees, conducting prescribed burns to maintain forest health and planting food crops for various game species. The result was a wildlife paradise, a park-like forest of longleaf and loblolly pines favored by both game species and non-game species. Periodically, the Cones cut timber to maintain the tax advantages given to commercial forests. However, timber cutting was always done in ways compatible with wildlife management.

Everything changed in 1991 when Ben Cone discovered red-cockaded woodpeckers on his land. The Service informed him that 1,121 acres, worth $1,425,000, were now off limits to most uses because they were inhabited by woodpeckers. Since Cone was not compensated for his losses, he substantially increased the amount of timber he cut on the rest of his acreage for two reasons; to prevent woodpeckers from occupying more land, and to generate cash to offset his losses. 6 He increased the amount of timber cut from less than 1,000 tons to more than 10,000 tons per year. [See Figure I.]. Another factor that influenced Cone was the federal Death Tax. When Ben inherited the land from his father he had to cut large amounts of timber to pay the tax, and he did not want that to happen again when his children inherited the land from him. Yet the IRS refused to acknowledge the decreased value of the land due to woodpeckers, which cast a cloud of uncertainty over the value of the land. So to prepare for the likelihood that the federal government would assess the land at its pre-woodpecker value, Cone cut timber in order to inoculate as much of his land against the woodpecker as possible and to stockpile money for his children to pay the Death Tax.

In addition, broader harm has been done to the woodpecker by its listing under the ESA. One of the Service's recovery goals is to maintain breeding pairs in various parts of the woodpecker's range, including 700 breeding pairs in the Sandhills of North Carolina. However, attaining that goal has been difficult because North Carolina landowners preemptively cut 15,144 acres of trees, of which 13,318 acres were in the state's Sandhills region — the woodpecker “hotspot” in North Carolina — and could have supported 67 pairs. 7

The Service's 2003 revised recovery plan estimated the Sandhills contained 683 pairs of woodpeckers, which is just short of the plan's goal. 8 However, if landowners had not cleared forest habitat preemptively, the recovery goal could have been exceeded with a total of 750 pairs.

“Land use restrictions to protect spotted owls and other species reduced property values.”

There is additional evidence of the ESA's destructive impact on the red-cockaded woodpecker and pine forests in the southeastern United States:

A survey of private landowners in the Sandhills region of North and South Carolina found that owners of land near red-cockaded woodpeckers were 5 percent less likely to reforest the land once it was cut — resulting in significant habitat loss for an imperiled species like the woodpecker. 9

Owners of land within the woodpecker's designated habitat and one mile or less from a colony were 25 percent more likely to harvest their timber than landowners farther away. 10

Landowners who harvested timber in the woodpecker's range were 21 percent more likely to clearcut their acreage due to the proximity of woodpeckers. 11

Case Study: Spotted Owls. In the Pacific Northwest, the spotted owl was listed as an endangered species in 1990 due to habitat lost to logging. During and after the debate over its listing, however, logging on private lands increased markedly. According to the Service, small landowners resorted to “panic cutting” from fear of federal restrictions to protect the owls. 12 For instance, Vincent Shaudys, a retired university professor, clearcut 24 acres of hemlock and fir in Washington state because there were spotted owls on three sides of his property and he was concerned they would take up residence on his land. 13 There is also evidence that the spotted owl has caused large scale diminution of property values. A survey in three Washington counties found that the restrictions designed to protect spotted owls and other species had reduced property values by about 5 percent to 9 percent, for a total loss in land value of almost $700 million. 14 [See Figure II.]

Case Study: Don't Mess With Texas Songbirds. The Hill Country of central Texas is host to a variety of listed species, including two birds, the golden-cheeked warbler and black-capped vireo. The breeding habitat for these two bird species totals more than 55 million acres. 15 Much of this land could be subject to the ESA's land use controls. Among the landowners who have been affected by the warbler is Margaret Rector, who bought 15 acres on the edge of Austin, Texas, in 1973 as a retirement investment. In 1990, the golden-cheeked warbler was listed. By 1994, the property's assessed value had dropped 97 percent, from $991,862 to $30,360. Theoretically, the land could be developed. However, a landowner must obtain clearance from the Service in order to develop land identified as endangered species' habitat. In 1995, when a potential buyer for the property learned of the Service's demands — pay a mitigation fee of $34,000 and obtain a permit, which would entail spending at least tens of thousands of dollars more for lawyers, biologists and other consultants, none of which was guaranteed to free the property from the ESA's grip — he canceled. 16

Margaret Rector's case is not an isolated one. The plight of landowners due to the warbler and vireo has been observed by federal and state wildlife officials. 17 In addition, the Real Estate Center at Texas A&M University conducted two studies of the ESA's effects on land values. A 1994 study by the Real Estate Center found that in Travis County — on the eastern edge of the Hill Country and encompassing the City of Austin — the ESA devalued 897 separate properties by 43 percent, or $74 million. 18

The Real Estate Center also surveyed 6,000 Texas real estate brokers in 1995, asking them to estimate the effects of the ESA on a number of factors including real estate values. One of the most noteworthy results was the estimated diminution in median property values for the Hill Country and the Piney Woods region of Northeast Texas, home of the red-cockaded woodpecker. [See Table I.]

For the entire state of Texas, the survey found that the ESA reduced the value of farmland and rangeland by 10 percent to 20 percent below what it otherwise would have been. The real estate brokers also predicted the average decline in land values over the next five years due to the Act would range from 10.3 percent for urban land to 27 percent for rural land on the transitional edge of urban land. 19

Case Study: The Mouse that Roared. Another example of an ESA listing causing harm to both species and landowners is Preble's meadow jumping mouse. The tiny rodent is found in the Rocky Mountain Front Range in Colorado and Wyoming, adjacent to the eastern foothills of the Rockies. The Service listed the mouse in 1998 because it was allegedly threatened by rapid development. The listing was controversial for a number of reasons, one of which was that private landowners were forced to sacrifice land for the mouse. For example, around 150 acres belonging to a Colorado Springs developer, Classic Homes, worth at least $18 million, was declared off limits due to the mouse. Classic Homes also had to spend $2 million to construct a mouse “bridge” above a drainage zone, $1.3 million more than the typical box culvert would have cost. Furthermore, Classic Homes shells out $200,000 annually for biologists, lawyers and other mouse experts to certify which land can be used or not. 20

However, the total costs for the mouse are much higher. In 2003, the Service designated 31,222 acres of the mouse's habitat as “critical,” a more restrictive classification. The Service estimated that the designation would cost landowners and the agency as much as $181 million over the first 10 years. 21 This, however, almost certainly underestimates the total cost of listing the mouse, since much of its habitat was not designated as critical but is still subject to costly restrictions.

The mouse itself has also been harmed by its ESA listing. Researchers at the University of Michigan surveyed about 25 percent of the mouse's habitat. They found that 26 percent of the area surveyed was being managed so as to make it inhospitable to the mouse. A majority of landowners would not allow officials to survey their land for the mouse. 22 [See Figure III.]

Furthermore, a number of survey respondents appeared not to know their land was mouse habitat. “As more landowners become aware that their land contains Preble's habitat, it is likely that the impact on the species may be negative,” the authors conclude, because, as the survey results show, landowners are more likely to make the land inhospitable to the mouse. 23

How the ESA Harms Unlisted Species. The ESA has even dissuaded landowners from reintroducing rare species that are not yet listed under the Act. For example, David Cameron's family owns a cattle and sheep ranch in Montana. Following the family's long tradition of wildlife conservation — his father reintroduced pronghorn antelope — David was eager to reintroduce grayling, a rare species of trout. The ranch had suitable stream habitat, but when Cameron learned the Service was considering listing the grayling, he abandoned the project due to fear over potential ESA imposed restrictions. 24